Power corridors in New Delhi and Tokyo are abuzz with expectations over Prime Minister Narendra Modi’s ongoing visit to Japan. Can India and Japan join hands to strengthen the Asian economy? Can Japanese investments in India be scaled up to $100 billion over the next decade? Can Modinomics and Abenomics work in tandem to not only boost bilateral ties but also energise global markets?
Answers to these questions hinge on the broad roadmap of ties that the two governments chart out during this visit. The relationship needs out-of-the-box ideas and a comprehensive approach to scale newer heights. The discussion must shift from lauding the strength of bilateral ties to finding new avenues of cooperation—and now.
Enhancing bilateral trade
The priority areas should include encouraging cross-border investments and capitalising on freer trade. Currently, Japan is involved in nearly 70 infrastructure projects in India, and has invested $4.5 billion in the Delhi-Mumbai Industrial Corridor (DMIC). Moreover, Japanese companies such as Mitsubishi, Suzuki and Toshiba have been investing in the Indian market and collaborating across sectors. Despite such big-ticket projects, bilateral trade between India and Japan stood at only $18.5 billion in 2012-13. Though the trade volume has nearly tripled from $6.5 billion in 2005-06, it barely scratches the surface, given the limitless canvas of opportunities that the two nations have to offer.
India requires foreign investments to the tune of $1 trillion in infrastructure sector alone in its quest for growth. The DMIC model, which is a symbol of major Japanese investment and participation in India, should be emulated to set up similar heavy duty projects as well, such as the Amritsar-Delhi-Kolkata Industrial Corridor or the Mumbai-Bangalore-Chennai Industrial Corridor. Collaborations on high-speed trains must remain high on the agenda for both countries too. The recently opened Metro network in Mumbai was made possible through a Japanese loan worth $753 million. Besides the proposed tie-up on creating an Ahmedabad-Mumbai link, Japan and India can now explore jointly creating the Mumbai-Bangalore-Chennai network—a task that can be given to Central Japan Railway Company for a feasibility study.
Another interesting idea is the creation of SEZs for Japanese companies to complement India’s investment needs. In the past few years, Neemrana, a small town in Rajasthan, has emerged as a lucrative investment hub for Japanese companies. Creation of SEZs, dedicated exclusively for Japanese investors, will go a long way in driving infrastructure and manufacturing in the coming years.
On the Asean front, affinity